Quick Look:
- Natural gas trends bullish at $2.01; potential resistance up to $2.22, guided by EMAs.
- Prices rise amid Middle East tensions and tight supply forecasts.
- EU sanctions on Russian LNG cut dependency but incur high costs.
The natural gas market has exhibited signs of resilience, with prices nudging upward in Asian markets as of Friday. A combination of geopolitical tensions and changing supply expectations primarily influenced this uptick. Analysts note that the ongoing discord in the Middle East continues to stir volatility in the oil sector. Meanwhile, anticipations of a constrained supply further energize the market dynamics.
Moreover, traders keenly await the upcoming US inflation data, expecting it to guide the market’s direction. Disappointing economic growth figures from the US have contributed to a dip in the US dollar. Thereby inadvertently providing a lift to oil prices. Additionally, reducing US oil and natural gas inventories has signaled tighter conditions in the oil markets, reinforcing the bullish sentiment.
Natural Gas Prices Edge Up 0.65%, Reach $2.01 on April 26
As of April 26, natural gas prices marked a 0.65% increase, with the current price at $2.01. The market shows a bullish trend, sustained above the pivot point of $1.99. Technical analysis reveals that if prices hold above this pivot, resistance could be tested at $2.06, followed by $2.13 and $2.22. On the downside, support levels are poised at $1.92, $1.84, and $1.75. The fifty-day and two-hundred-day Exponential Moving Averages (EMA) at $1.99 and $1.93 also guide traders in their strategy formulations.
EU Cuts Russian Gas Dependence by Two-Thirds, Spends €8B on LNG
In Europe, the geopolitical landscape is also affecting the energy sector, with the European Union (EU) deliberating sanctions targeting Russian liquefied natural gas (LNG) as part of a broader sanctions package. This move follows the invasion of Ukraine by Russia, which previously led to bans on Russian coal and seaborne crude oil exports. Despite the extensive sanctions, the EU has significantly reduced its dependency on Russian gas, decreasing it by approximately two-thirds. However, the financial ramifications are notable, with the EU having paid around €8 billion for Russian LNG exports last year.
US Natural Gas Use Hits 89.1 Bcf/d, Up 4% Annually Since 2018
In 2023, the US reported a total natural gas consumption of 89.1 billion cubic feet daily (Bcf/d). Therefore marking a steady 4% average annual increase since 2018. Notably, new consumption records were set from March to November 2023, with the electric power sector showing a 6% increase during the peak months of July and August. The shift from coal to more sustainable energy sources, including natural gas and renewables, is becoming increasingly evident in power generation figures, highlighting a transformative period in the US energy landscape.
This intricate interplay of market dynamics, geopolitical events, and technical factors continues to shape the global energy markets. Investors and policymakers must remain vigilant and responsive to the rapidly evolving economic and political indicators influencing these critical sectors.